THURSDAY, March 28, 2024
nationthailand

Dow tumbles more than 700 points as surge in coronavirus cases rattles investors

Dow tumbles more than 700 points as surge in coronavirus cases rattles investors

Coronavirus infections sweeping across the southern United States on Wednesday reawakened investor alarm that the stubborn disease might derail an economic recovery and slammed the breaks on stock market momentum.

The Dow Jones industrial average fell 709 points, or 2.7 percent, settling at 25,447 on the day after falling as low as 859. The blue-chip index is still poised to post one of its best quarters in history, but remains down around 10 percent for 2020.

"Wishful thinking has given way to practical reality when it comes to Covid-19," said Daniel Wiener, chairman of Adviser Investments. "Warm weather and a reduction in the rate of deaths does not give people the right to go out and party. They partied, the market partied and the hangover begins." 

The Standard & Poor's 500 index fell 81 points, or 2.6 percent, to close at 3,050. The broad index, like the Dow and Nasdaq composite, is on track for one of its best quarters in decades. The S&P is down 5 percent in 2020.

The Nasdaq, whose technology stocks have powered markets out of their spring depths, snapped an eight-day winning streak on Wednesday, falling from its all-time high. The Nasdaq slid 222 points, or 2.2 percent., to close at 9,909.

The sell-off was wide and deep, marking the steepest drop since June 11. Crude oil fell 6 percent. European indexes closed down 3 percent. Even highflying mega-tech stocks like Microsoft, Apple and Alphabet finished negative.

Energy, industrials, real estate and financials - industries tied to a reviving economy - led all 11 stock market sectors into the red as Florida, Texas and Arizona reported spikes in virus outbreaks. Airline stocks dove after officials in New York, Connecticut and New Jersey announced 14-day quarantines on incoming travelers from virus hot spots.

"Markets have been looking past the negative headlines on the economy for many weeks," said Wayne Wicker, chief investment officer at Vantagepont Investment Advisers. "However, the health crisis risk that appears to be accelerating in many states with the reopening process has started to give investor's pause." 

Shareholders may also have to reevaluate their expectations for next year's corporate profits, he said, which are projected to recover sharply but may change if shutdown measures are reinstated by government leaders, he said. 

"Just when it looks like the markets are shaking themselves free of coronavirus another bout of worry returns to put them on their back," Russ Mould, investment director at AJ Bell, wrote in a note to investors.

Wall Street also digested news of new travel restrictions in the northeast. New York Gov. Andrew Cuomo, a Democrat, announced Wednesday that New York, along with New Jersey and Connecticut, will require some nonresidents entering any of the three states to self-isolate for two weeks after they arrive. The quarantine mandate would apply to visitors from states that are suffering elevated levels of coronavirus infections.

While such regional measures may not hinder the economy as much as a nationwide shutdown, the mixed signals and stutter-step nature of the recovery could drag down the stock market, Mould said.

As central bankers and grim economic data point to a slow, years-long recovery, investors have nonetheless been buoyed in recent weeks by government relief measures and a commitment from the Federal Reserve to keep interest rates near zero for at least several more years.

But optimism that businesses will climb out of the recession has also been checked by a resurgence in confirmed cases. More than 30 states and U.S. territories have reported a higher rolling average of infections compared to last week. In recent days and weeks, some states and businesses that had scheduled to reopen have since reversed course and delayed their plans, fearing that the coronavirus will spread further.

 

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